Miyoshi Oil & Fat Co.,Ltd. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥43.76B
• Operating Income: ¥1.15B
• Net Income: ¥2.77B
• EPS: ¥897.75

Income Statement

Balance Sheet

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Segment Information

Full Year Forecast

Disclaimer

This data was automatically extracted from XBRL files. Please refer to the original disclosure documents for accuracy.

AI Financial Analysis

Executive Summary

Miyoshi Oil & Fat Co., Ltd. (TSE: 4404) reported FY2025 Q3 consolidated results under JGAAP with revenue of ¥43.76bn (+3.8% YoY), gross profit of ¥9.06bn (gross margin 20.7%), and operating income of ¥1.15bn (-60.9% YoY), indicating significant margin compression at the operating level despite modest topline growth. Operating margin deteriorated to 2.6%, signaling cost pressures and/or higher SG&A that pricing could not fully offset. Ordinary income was ¥1.13bn, broadly in line with operating income after ¥165m interest expense, implying limited non-operating uplift. Net income surged to ¥9.15bn (+228.8% YoY), producing a very high reported net margin of 20.9%; this gap versus operating performance strongly suggests large extraordinary gains or non-recurring tax effects. The DuPont bridge shows ROE of 22.6% (net margin 20.9%, asset turnover 0.537x, leverage 2.01x), but this ROE is driven by non-operating items and is not reflective of core profitability. Liquidity appears adequate on the face of the balance sheet with a current ratio of 132% and quick ratio of 121%, and working capital of ¥8.20bn. Capital structure is moderate, with liabilities/equity at 1.03x and an implied equity ratio around 49.8% (calculated as equity/total assets), although the disclosed equity ratio field shows 0.0% due to non-reporting. Interest coverage is about 7x (operating income/interest), acceptable but down from prior strength given the decline in operating profit. Cash flow statement line items are unreported (shown as zeros), limiting assessment of cash conversion, capex intensity, and free cash flow. EPS is ¥897.75, but shares outstanding and book value per share were not disclosed in this dataset, restricting per-share and valuation context. Inventory of ¥2.87bn appears low relative to sales, possibly due to classification differences; working capital dynamics cannot be assessed without receivables/payables details. The effective tax rate shown (0.0%) is not meaningful given the presence of ¥1.03bn income tax expense and the large extraordinary contribution to net income. Overall, headline profitability at the net level is strong due to one-off factors, but underlying operating performance weakened materially. Near-term outlook hinges on the sustainability of price-cost spreads in fats and oils, ongoing cost normalization, and the absence of further one-off gains. Data limitations (notably cash flows, D&A, and per-share base) constrain the depth of cash flow and valuation analysis; conclusions focus on available non-zero disclosures.

Profitability Analysis

ROE_decomposition: Calculated ROE 22.57% = Net margin 20.91% × Asset turnover 0.537 × Financial leverage 2.01. The high ROE is predominantly driven by an outsized net margin inflated by extraordinary/non-recurring items, not by core operations. margin_quality: Gross margin is 20.7% on ¥9.06bn gross profit; operating margin is 2.6% on ¥1.15bn operating income, down sharply YoY (-60.9%). The spread between gross and operating margins (~18.1ppt) implies elevated SG&A/other operating charges. Ordinary income (¥1.13bn) is close to operating income after ¥165m interest, indicating limited recurring non-operating gains. Net margin at 20.9% is not reflective of underlying operations. operating_leverage: Revenue grew +3.8% YoY while operating income fell -60.9% YoY, evidencing negative operating leverage and sensitivity to input costs and fixed overheads. Interest coverage at ~7.0x (¥1,150m/¥165m) remains adequate but is pressured versus a normal year.

Growth Assessment

revenue_sustainability: Topline growth of +3.8% YoY suggests resilient demand or price pass-through in core categories, but sustainability depends on raw material (e.g., palm/tallow) and energy cost trajectories and competitive pricing dynamics. profit_quality: Core profit quality weakened; operating profit compression despite higher revenue indicates mix pressures or incomplete cost pass-through. The surge in net income is attributable to non-recurring items (exact nature undisclosed), lowering the quality of earnings. outlook: Absent the repeat of extraordinary gains, net profitability should normalize closer to operating run-rate levels. Recovery in operating margin hinges on cost normalization, improved mix, and disciplined SG&A. Monitoring price-cost spread and contract repricing cadence will be key through FY2025–FY2026.

Financial Health

liquidity: Current ratio 132.1% and quick ratio 120.9% point to acceptable short-term liquidity; working capital totals ¥8.201bn. Cash and cash equivalents are undisclosed in this dataset. solvency: Total liabilities/total equity is 1.03x; implied equity ratio is ~49.8% (¥40.553bn/¥81.418bn), indicating a balanced capital structure despite the reported 0.0% field (undisclosed). capital_structure: Financial leverage (assets/equity) at 2.01x aligns with moderate gearing for a food ingredients/chemicals peer set. Interest burden (¥165m) is manageable relative to operating income, though cushion has narrowed.

Cash Flow Quality

earnings_quality: OCF and FCF are undisclosed; the OCF/Net Income ratio shown as 0.00 is not informative. Given the large gap between operating and net income, reported earnings are heavily influenced by non-operating/extraordinary items, reducing quality. FCF_analysis: Free cash flow cannot be computed without OCF and capex. Depreciation is undisclosed; EBITDA cannot be assessed. working_capital: Inventories stand at ¥2.865bn; receivables and payables are not provided, limiting analysis of cash conversion cycle. The decline in operating income suggests working capital discipline is important to preserve cash in the near term.

Dividend Sustainability

payout_ratio_assessment: Annual DPS and payout ratio show as 0.00 due to non-disclosure; thus, payout capacity cannot be inferred from this dataset. EPS of ¥897.75 is inflated by one-offs and is not a stable base for payout analysis. FCF_coverage: FCF coverage cannot be evaluated since OCF and capex are undisclosed. Using net income for coverage would be misleading given non-recurring items. policy_outlook: Without dividend policy disclosure and cash flow data, sustainability assessment hinges on normalized operating earnings and recurring free cash flow rather than current period net income.

Risk Assessment

Business Risks:

• Raw material price volatility (e.g., palm oil, tallow, specialty fats) impacting gross margins
• Energy and logistics cost fluctuations affecting cost of goods sold
• Pricing power and timing of pass-through to customers amid competitive pressures
• Product mix shifts between industrial and consumer channels affecting margins
• Customer concentration or contract repricing risks in B2B segments
• Regulatory and food safety compliance in oils/fats and functional ingredients
• FX movements influencing import costs (if applicable)

Financial Risks:

• Compression of operating income reducing interest coverage and covenant headroom
• Potential normalization of extraordinary gains leading to lower net income and ROE
• Working capital swings (inventory and receivables) pressuring OCF
• Refinancing risk and interest rate exposure on borrowings
• Limited visibility due to unreported cash flow and D&A data

Key Concerns:

• Large divergence between operating income (¥1.15bn) and net income (¥9.15bn), indicating reliance on one-offs
• Negative operating leverage despite topline growth
• Insufficient disclosure on cash flows, capex, and depreciation limiting assessment of earnings durability

Investment Implications

Key Takeaways:

• Revenue growth of +3.8% YoY accompanied by a sharp -60.9% YoY decline in operating income highlights margin pressure.
• Net income of ¥9.15bn and ROE of 22.6% are flattered by extraordinary/non-recurring factors.
• Liquidity is adequate (current ratio 132%, quick 121%); leverage is moderate (liabilities/equity 1.03x).
• Interest coverage around 7x remains acceptable but has weakened with operating profit.
• Cash flow, capex, and D&A are undisclosed; earnings quality assessment is constrained.
• Sustainable valuation anchors should rely on normalized operating margins, not current net margin.
• Monitoring raw material costs and pricing pass-through remains critical.

Metrics to Watch:

• Operating margin and gross-to-operating spread
• OCF and FCF once disclosed; OCF/NI ratio
• Capex and depreciation to gauge maintenance needs
• Inventory and receivables days; working capital intensity
• Extraordinary gains/losses and non-operating income normalization
• Interest coverage and debt metrics (net debt/EBITDA when available)
• Input cost indices (palm oil, energy) and pass-through timing

Relative Positioning: Versus Japan food ingredients and specialty chemicals peers, Miyoshi’s current-period net profitability appears optically high due to one-offs, while core operating margin (~2.6%) is on the low side. Balance sheet leverage is moderate with an implied equity ratio near 50%, broadly in line with peers. Near-term positioning will depend on restoring operating margin resilience and demonstrating cash conversion.

Disclaimer

This analysis was auto-generated by AI. Please note the following:

• No Guarantee of Accuracy: The accuracy and completeness of this analysis are not guaranteed. For accurate financial data, please refer to the original disclosure documents published on TDnet or other official sources
• Not Investment Advice: This analysis is for general informational purposes only and does not constitute investment advice under applicable securities laws. It is not a recommendation to buy or sell any specific securities
• At Your Own Risk: Investment decisions should be made at your own discretion and risk. We assume no liability for any losses incurred based on this analysis